Timeshares, Your Credit Report and Your Credit Score
My name is Wayne Sanford, I have been in the credit repair industry now for over 11 years. In that time I have analyzed over 16, 000 credit reports for clients across the country from a credit repair viewpoint. While credit repair is a service and like any service out there that you can do it yourself and for a small percentage of people there are issues that you just do not need a credit repair company’s help. Especially times where it’s only a minor bit of advice that is needed.
IF credit repair was as easy as people/government & media make you believe then EVERYONE would have 700 credit scores.
The fact is it isn’t, laws are formed against the consumer, laws are used AGAINST the consumer so to be naive enough to think that a credit company who deals with these companies on a day to day basis doesn’t know more than you is an uneducated thought.
THE ISSUE is finding a good company that wants to help you not just take your money or keep you as a customer on the books for years. So that is where you need to research them and check out reviews and identify which reviews are the obvious bogus ones..
GOOD LUCK and enjoy the information in this blog and I hope it helps!
I recently read an article about timeshares and made me think about adding the topic of credit to it as a blog which it was a great article but was missing a few things so I figured I would throw in my two cents on the topic and elaborate on several things consumers need to know that the article missed.
You typically hear about these high pressure (once you get there) sales pitches about getting a free 2-3 day vacation and a $100 credit towards something as long as you attend their 90 minute presentation about their product giving you the ability to “buy in for pennies “of the actual price so you have a vacation spot to go to after paying for the airfare of course.
Now everyone is different and I’m sure there are plenty of people who love their timeshare but I encounter most of the people who succumbed to the pressure and “just signed for it” since it seemed like a good idea at the time.
A VERY LONG time ago I attended one of these with an ex after saying no multiple times he even asked us to “fake it” so when we got up for the table with him (where there was about 30 others in same situation talking) he would make announcement that we signed and then everyone claps. At the time I could care less but it gives a sales impression to the others that maybe they are missing something if they don’t sign.
But that was a younger me from almost a decade and a half ago and definitely would not happen now.
Technically this time share is looked at by lenders as a mortgage which it actually is. Either type of timeshare (a deeded interest of ownership or right to use with no ownership).
I have heard of many people who at one point were just looking to sell their interest for $1 just to get rid of it but could not find any takers (We call this a clue).
Timeshares are for a specific market; typically you have a fair amount of discretionary income the couple is usually in their mid-30’s and up. They actually buy data from the credit bureaus to target their customers would can afford their product which in by all rights seems fair, they can’t force you to buy their product after all.
Nonpayment of this debt drops your credit score dramatically when it occurs and then slowly effects your credit less as time goes on. Doing what’s called a “Deed in Lieu” is basically they are agreeing to just sign away your rights to the timeshare and allow the lender to take back control and the interest in the property back.
This is where the article does not elaborate, just like a car you decide you don’t want or because you found out the “sales person or dealer” lied to you. Calling the lender and yelling does no good as all they did was lend you money to purchase the product.
If these timeshare companies use such high pressure tactics to get you to buy that means it is very difficult to sell them so why agree to take it back? They were already paid by the lender. It’s like a car repossession, so they can sell it again and again. See the huge profit in this???
When you stop making payments it starts hurting your credit of course. The above deed in lieu I mentioned is the lender releasing you from the debt to take back the property rights. In the coding of the credit bureaus which ranges from 0-9 there is no code for “deed in lieu” as the article mentions. So if you are lucky enough to get them to agree to a deed in lieu and make all payments on time your score WILL NOT change.
THE PROBLEM is future lenders look at that like a foreclosure which as of now there is a 3 year rule (with some exceptions) from buying another home. So it does not have to say foreclosure but if a lender sees “settled on account” or “short sale” or even “paid for less” then a future mortgage lender and underwriter view this as a home loan agreement you got into and then could not make the payments and had to give the rights back to the 1st lien holder, make sense now?
HOWEVER it all depends on the coding and wording on the reporting of the account on your credit & how it’s reported so it’s possible it can get overlooked by a future lender.
Any major purchase which this falls under requires some research and scrutiny. If you can’t take the paperwork home or have your attorney review the paperwork (Want high quality attorneys practically free just shoot me an email) and then look at your budget and plan for something to go wrong so if it did can you still afford the payment. That is a major question you need to ask yourself.
I’m not saying this is a bad idea but it’s something that requires more research than a 90 minute tour allows with 60 minutes of hard selling so don’t fall into the “act now” trap.
NOTE: a 30 day recent late payment can drop your credit score anywhere typically from 60-90 points depending on the rest of your credit file.
*** Want to learn more about how the credit system works? Buy my book for easy to understand concepts of how credit works and how lenders look at you at http://waynethecreditguy.com/waynes-store